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The defence opened its evidence in the Financial Market Authority's case against Milford Asset Management portfolio manager Mark Warminger saying it is based on "speculation, supposition, and retrospective hindsight".

His lawyer, Michael Heron QC, told the High Court at Auckland today that Warminger categorically denied the allegations, that the evidence falls well short of proving he intended to mislead the market, and that he could not, and did not do so in respect of each of the 10 trades.

Warminger is accused of breaching securities law that prohibits trading that is not for a genuine commercial purpose and creates an artificial appearance in the market in relation to 10 sharemarket trading actions carried out in 2014. It's the country's first market manipulation case to come to trial.

"His buying or selling had a genuine purpose - to acquire or dispose of shares for profit or to get market intelligence," Heron said. "His purpose was not to set or maintain the price of any security or to create an artificial market."

Heron said evidence will be called from Professor Michael Aitken, one of the world's leading experts on market manipulation, who considered each of the 10 trades and concluded there is not a single instance where Warminger's trading created or was likely to create a false or misleading appearance.

Evidence will also be called from Milford head of investments Brian Gaynor to address the FMA's theory that Warminger was under pressure as a result of the underperformance of the $670 million of funds under his management.

While Warminger's funds were underperforming the benchmark by August 2014, Gaynor was not concerned about this as he considered the underlying investments were sound on a medium term basis and that the stock selection had been sound, Heron said.

The case turns on the trader's purpose yet for three out of the 10 trades the FMA has not interviewed Warminger and asked him what his purpose was, Heron said. His first opportunity to give an explanation will be at the trial where "penalties are sought against him and where his reputation and livelihood are at stake".

The case also depends on Warminger having been told of opportunities of volume crossing opportunities where he bought and sold shares in the same stock on the same day.

Heron questioned why UBS trader Jeremy Coe, who is alleged to have informed Warminger about volume crossings in a number of these trades, has not been called by the FMA.

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"He is involved in six of the 10 causes of action. He is a key witness. He clearly could have been called but he was not," Heron said.

There is not one trade where there is direct evidence that Warminger knew he could cross at the price he later did at the time of his trading via direct market access, he said.

Heron said because of key evidential gaps, the FMA's two experts, Mark McMahon and Phil Solarz, were left to divine from the trade data, a handful of emails, and the timing of some telephone calls, an improper purpose behind his trading. "They have ignored evidence that contradicts their theory, speculated on matters of fact in the absence of relevant witnesses and wandered far from the proper province of an expert," he said.

A blanket rule such as that proposed by the FMA that the only purpose for trading is to buy at the lowest price available and sell at the highest price is unhelpful, Heron said. " It does not assist in distinguishing between legitimate and illegitimate trades".

This is a novel case that will test what is and isn't market manipulation. The absence of specific rules or guidance on the type of conduct involved in this case is relevant to the assessment of what Warminger ought to have known, he said.